<PAGE>   1
                                   EXHIBIT 20

                             AUDIT COMMITTEE CHARTER

I.    PURPOSE

      The Audit Committee ("Committee") is appointed by the Board of Directors
("Board") of Hanover Foods ("Company") to assist the Board in fulfilling its
oversight responsibilities. The Committee's primary responsibilities are to:

   -  Monitor the integrity of Hanover Foods financial reporting processes and
      systems of internal controls, regarding finance, accounting, security,
      environmental and legal compliance, and information systems.

   -  Monitor the independence and performance of Hanover Foods independent
      accountants and the Internal Audit department

   -  Provide direction and oversight of the Business Ethics and Conduct
      function.

   -  Facilitate and maintain an open avenue of communication among the Board of
      Directors, Senior Management, the Internal Audit department, and the
      independent accountants.

II.   ORGANIZATION COMPOSITION

      The Committee shall be comprised of three or more independent,
non-executive directors, as determined by the Board of Directors, each of whom
meets the requirements of the New York Stock Exchange. Each member will be free
from any financial, family, or other material relationship that, in the opinion
of the Board of Directors, would interfere with the exercise of his or her
independent judgment. All members of the Committee will have a general
understanding of basic finance and accounting practices and at least one member
must have accounting or related financial management expertise.

III.  MEETINGS

      The Committee will meet at least four (4) times annually. Additional
meetings may occur more frequently as circumstances dictate. The Committee
chairman shall approve an agenda in advance of each meeting.

      The Committee shall meet privately in executive session at least annually
with the Financial Vice President-Auditing and Security, the independent
accountants, such other members of management as deemed appropriate, and as a
committee to discuss any matters that the Committee believes are relevant to
fulfilling its responsibilities.

IV.   RESPONSIBILITIES AND DUTIES

      The Committee believes its policies and procedures should remain flexible
in order to best react to changing conditions and provide reasonable assurance
to the Board of Directors that the accounting and reporting practices of the
corporation meet applicable requirements and that an effective business ethics
program exists.
<PAGE>   2
A.    REVIEWS AND PROCEDURES

   -  Adopt a formal written charter that is approved by the Board of Directors.
      The charter will be reviewed as necessary, but at least annually. The
      charter should be published at least three (3) years in accordance with
      Securities and Exchange Commission ("SEC") regulations.

   -  Review and approve the annual audited financial statements prior to filing
      or distribution. The review should include discussion with management and
      independent accountants of significant issues regarding accounting
      principles, practices, and judgments. Quarterly unaudited financial
      results should be reviewed by the Committee, or by the Committee chairman
      acting on behalf of the Committee, before their release or submission to
      the SEC.

   -  Prepare a report to shareholders as required by the SEC to be included in
      the Company's annual proxy statement.

   -  Maintain minutes or other records of meetings and activities.

   -  Keep the Board of Directors informed of the Committee's activities.

   -  Conduct or authorize investigations into any matters within the
      Committee's scope of responsibilities. The Committee has direct access to
      anyone in the Company and shall be empowered to retain independent
      counsel, accountants, or others to assist it in the conduct of any
      investigation.

B.    INDEPENDENT ACCOUNTANTS

   -  Select and recommend independent accountants to the Board of Directors for
      ratification by the shareholders. When conditions warrant, approve
      discharge of independent accountants. At the time of a change in partner
      assigned to the Company, the Committee will review the selection of
      independent accountants, including possible selection of new independent
      accountants.

   -  Approve fees to be paid to the independent accountants.

   -  Ensure that a formal statement delineating all relationships between the
      independent accountants and the Company is received from the independent
      accountants annually. The Committee shall discuss with the independent
      accountants all significant relationships the accountants have with the
      corporation to determine the accountants' independence.

   -  Meet with the independent accountants and financial management of the
      Company to review the scope of the proposed external audit for the current
      year. The external audit scope shall include a requirement that the
      independent accountants inform the Committee of any significant changes in
      the independent accountant's original audit plan and that the independent
      accountants will conduct an interim financial review prior to the
      Company's quarterly filing with the SEC.

   -  Instruct the independent accountants that they are ultimately accountable
      to the Committee and the Board of Directors.
<PAGE>   3
C.    INTERNAL CONTROLS

   -  Make inquiries of management and the independent accountants concerning
      the adequacy of the Company's system of internal controls.

   -  Advise financial management and the independent accountants to discuss
      with the Committee their qualitative judgments about the quality, not just
      the acceptability, of accounting principles and financial disclosure
      practices used or proposed to be adopted by the Company.

D.    BUSINESS ETHICS AND CONDUCT

   -  Provide oversight to the Business Ethics and Conduct program.

   -  Require management to report on procedures that provide assurance that the
      corporation's mission, values and code of conduct are properly
      communicated to all employees on at least a biannual basis.

   -  Review the corporation's code of conduct program annually and direct
      management to establish a system reasonably designed to assure compliance
      with the code.